We wrote this to you last time:
“Regardless of the recent rally, we continue to believe we are in a late stage environment as so many characteristics of a late stage market are showing up. They include:
Duration…all bull moves have a shelf life…even with the printing of trillions. 
A huge increase in margin. Remember, margin is your best friend in a bull and frankly, is one of the main characteristics that show up during a bull. But when markets top, margin is the market’s enemy as margin gets sold down first and quickly…exacerbating the selling.
Tons of IPOs with the bar lowered recently as we are seeing a few too many names coming public that have no sales. Yes…we said no sales. The wonderful investment banks are very good at coming up with anything as long as the public continues to bite.
Tons of secondary offerings.
Massive insider selling with a clear lack of insider buying.
Bearish measurements remaining at multi-decade lows. Dare we say some of these measurements have to go all the way back to 1987 to find this lack of bearishness.
There is more. Just realize these are the characteristics that always show up near the end of bull runs and in advance of the tops. The issue is when as often, we are talking months in advance. The last time the market really topped back in 07, it took months of deterioration before the final top occurred. Keep in mind, while the market was deteriorating back in 07, the Dow went into new high ground…masking the trouble.
So far, we are seeing nothing more than rolling corrections as the major indices remain above the important moving averages. The most important point we need to make is that as the major indices have moved into new high ground, fewer and fewer stocks and sectors have accompanied the move. We count only about 60% of the market in good technical shape right now. At lower prices for the major indices, the number had reached into the 80s. This is a negative divergence.”
Firstly, the DOW is now outperforming as the NASDAQ-types sell off badly. This is not the greatest news as very often, near tops, risk is sold and “parked” into the low beta, mega-cap names in the DOW. This only lasts so long.
Secondly, and more importantly, growth stocks and risk areas that have led the market up are being bludgeoned. In just the past couple of days, the BIOTECHS were sold hard with many breaking the 10 week/50 day average. On top of this, leading growth in TECH and INTERNET also came under severe pressure with many also breaking badly…all on heavy volume.
Thirdly, which goes hand in hand with the first two, tons of distribution days in the NASDAQ at the recent highs.
So careful. Again, markets do not top in a flash. Instead it is a process…and there is good potential this process is continuing to play out. So far, just a big rotation out of “risk” and into what we would call “lesser risk” areas. We will be watching moving averages and support areas very closely in the days and weeks ahead as the ice feels like it is getting thinner. The “risk” indices are teetering while the better indices are churning.